Understanding Health Savings Accounts

If you are currently participating in a Tufts Health Plan Advantage HMO Saver or Advantage PPO Saver, you may consider opening a Health Savings Account (HSA). This account can be packaged with your health plan to help you pay for out-of-pocket expenses. Think of health savings accounts as medical bank accounts, giving you more control over a portion of your health care dollars.

What is a Health Savings Account?
An HSA is an individual health savings account that you own and that may be used for the payment of out-of-pocket costs as well as future medical expenses.

How do I set up an HSA?
To qualify for an HSA, you must be a member of a High- Deductible Health Plan, such as a Tufts Health Plan Advantage HMO Saver or Advantage PPO Saver. Your employer may already offer an HSA plan, or you can set one up with a qualified bank or credit union.

How do I contribute to my HSA?
You can arrange to have money taken from your paycheck before taxes and deposited into your HSA, or you can open up an individual HSA and contribute money on your own. Your employer or a family member can also contribute to your HSA.

Will I be taxed on my HSA contributions?
No. If you arrange for paycheck deductions, the money goes into your HSA account tax-free. If you do not have this arrangement with your employer, or if you wish to contribute additional funds, you will be able to take a deduction for the money you contributed to your HSA that year when you prepare your federal income taxes. When you withdraw your HSA money to pay for any qualifying expenses, it is withdrawn tax-free.

What kind of health care expenses can I use the money in my HSA for?
HSA funds can be used toward your plan’s deductible, coinsurance, or copayments, or for qualified medical expenses that may or may not be covered by your health plan, such as dental or vision services, prescription drugs, and certain medical equipment. You can use your HSA money to pay for your health insurance premiums while you are collecting federal or state unemployment benefits. You can also use your HSA money to pay for COBRA premiums.

What happens to my funds if I leave my job or change health plans?
An HSA is like a savings account—it’s still your money, even if you leave your job or change health plans. You can also transfer the funds to an HSA at another company. You cannot make additional contributions to your HSA if you are no longer participating in a High-Deductible Health Plan however.

Do I have to use all the funds in the HSA within a year, or will the funds carry over to next year?
HSA funds can roll over from year to year, allowing you to save this pretax money for medical expenses down the road.

Can my HSA funds be invested?
Yes. Once contributions reach a certain amount they can be invested, and the earnings will be tax deferred, much like an individual retirement account or a 401(k).

Is there a limit to how much money I can contribute to my HSA in a year?
Yes, but that number changes yearly. In 2013 the maximum HSA contribution is $3,250 for employee-only coverage and $6,450 for family coverage.

Quick Tips to Make the Most of Your Benefits

Get into the habit of saving receipts and tracking expenses along with your regular monthly bill paying. Make sure your family knows to track these expenses, too. Keep them in a separate file labeled “Health Care Expenses.” At the end of the year, you can estimate how much you and your family spent per month — to give you a head start on next year’s estimate.

Visits with in-network providers are often less expensive than those with out-of-network providers, depending on your plan. Use our online doctor search tool to find a primary care provider or any kind of specialist, such as a dermatologist, ophthalmologist, or a therapist.

Be smart — compare costs and do some research to make the most of your health care dollars.

Know your options. With an HSA you can choose to pay for medical services out-of-pocket with your own money instead of using money in your account. You may want to do this if you are saving money for future health care needs.